Last Chance: Energy Tax Credits Expire After 2025 - Here’s How to Maximize Them

The clock is ticking on some of the most generous energy-related tax savings available.
Under the One Big Beautiful Bill Act (OBBBA), the 30% Residential Clean Energy Credit (RCEC) and valuable home energy improvement credits are set to expire after December 31, 2025. That means homeowners and business owners who invest in upgrades like solar panels, energy-efficient windows, or new heat pumps could see thousands in tax savings - but only if the systems are fully installed and placed in service before the deadline.

Originally, these credits were scheduled to phase down gradually through 2034. But the OBBBA accelerated the end date, making 2025 the last year to claim them. If you’ve been considering energy improvements, this is your final opportunity to maximize the benefit.

What’s Ending in 2025

Two major categories of energy credits disappear after December 31, 2025:

  • Residential Clean Energy Credit (30%)

    • Covers solar panels, geothermal heat pumps, solar water heaters, battery storage, and small wind energy systems.

    • Ends for property placed in service after 12/31/25.

  • Home Energy Improvement Credits

    • Apply to insulation, exterior windows and doors, energy-efficient HVAC systems, water heaters, and heat pumps.

    • Also end in 2025.

Who Qualifies

Homeowners making upgrades to their primary or secondary residence.

  1. Business owners installing clean energy systems in rental or commercial properties.

  2. There are no income phaseouts - these credits are widely available.

What You Can Claim

A 30% credit on qualifying clean energy installations completed and placed in service by 12/31/25.

  1. Specific dollar limits on certain improvements:

    • Up to $600 for windows.

    • Up to $2,000 for heat pumps.

  2. Credits can stack with state rebates and utility incentives for even bigger savings.

  3. Non-refundable credit: If the credit is larger than your 2025 tax bill, the unused portion can be carried forward to future years.

Why 2025 Is the Deadline

  • The OBBBA terminates the Residential Clean Energy Credit beginning in 2026.

  • Property placed in service after December 31, 2025 no longer qualifies - regardless of when it was purchased or contracted.

  • Waiting until 2026 means losing the credit entirely.

Smart Planning Tips

  • Start early. Permitting, contractor scheduling, and supply chain delays could push projects into 2026 if you wait too long.

  • Bundle improvements. Pair solar with insulation, windows, or HVAC upgrades to maximize credits in 2025.

  • Confirm installation timing. Signing a contract isn’t enough - the project must be fully installed and placed in service by December 31, 2025.

  • Work with qualified professionals. Keep receipts and certifications - you’ll need proper documentation to claim the credit.

Key Takeaways

2025 is the final year to take advantage of federal energy credits.

  • Up to 30% of clean energy costs can be claimed, plus thousands in home improvement credits.

  • Credits must be installed and placed in service by year-end - not just ordered.

  • Non-refundable, but carryforward rules let you apply unused credits to future years.

Next Step: Talk to Brothers Tax Firm today to plan which improvements qualify and how to claim your savings before the 2025 deadline.